India’s Crypto Saga: The KYC Chronicles of Selfies and Surveillance

by

Ah, India! The land where curry and chaos coexist in a delightful dance. And now, it seems, the Financial Intelligence Unit (FIU) has decided that every cryptocurrency user must undergo an onboarding experience reminiscent of a reality TV show. Yes, you heard it right! 😜

  • First up on the stage of compliance: India’s FIU demands live selfie KYC with geolocation and IP tracking for all new crypto users. Because nothing says “trust me” like a selfie with your location data screaming, “I’m here!” 📸
  • But wait, there’s more! Crypto exchanges will have to update KYC every 6 or 12 months based on user risk. Regular check-ups? Sounds like a trip to the dentist! 🦷
  • ICOs and those sneaky anonymity-focused crypto tools have been labeled as high risk under this new regime. It’s like calling out the bad guys in an old Western film. 🤠

The latest guidelines are like a stern teacher wagging a finger at misbehaving children-regulating crypto platforms to adopt stricter measures during user onboarding. The Times of India reports that we’re talking about verification more often than a teenager checks their social media. 🙄

New requirements include live selfies that use fancy software to ensure you’re actually alive and not just a very convincing cardboard cutout. Eye-blinking and head movement detection are the new party tricks we never knew we needed! 🕵️‍♂️

And yes, dear users, prepare to present additional government-issued photo ID, like a passport or Aadhaar. You’ll also need to verify your email address and mobile number-because who doesn’t enjoy jumping through hoops? 🎪

Before you can dive into the world of crypto, expect a small test transaction to your bank account. Because what’s a little financial fun without a sprinkle of skepticism? 💸

At the moment of registration, exchanges will want to capture your IP address, geolocation, timestamp, and device details. It’s like they’re building a spy novel, one user at a time! 🕵️‍♀️

For those classified as high-risk clients, KYC updates will happen every six months, while the rest of us get a yearly check-up. Just think of it as the adult version of the school health fair-minus the free juice boxes. 🍹

These tighter measures come hot on the heels of security incidents that rocked two of India’s most active cryptocurrency exchanges in recent years. In 2024, WazirX lost a staggering $235 million in a breach. Talk about a financial hangover! 🍾

The next year, CoinDCX experienced a $44 million hack. But, fear not! It targeted only the internal wallet, not customer cold wallets. Still, it left everyone clutching their pearls! 😱

FIU Issues a Firm “No” to ICOs and Privacy Cryptos

In a dramatic twist, the FIU reiterated its strong opposition to privacy-enhancing tools such as crypto mixers and tumblers. They are the no-nonsense parents in the digital playground, telling kids to keep their toys neat and tidy. 🚫

The regulator is on a mission to “strongly discourage” Initial Coin Offerings, which they believe lead to money laundering and terror financing. Because who wants that kind of drama? 🎭

As a result, registered entities must implement controls to prevent any transactions involving privacy coins and unregulated tokens. It’s like a game of Whack-a-Mole, but with financial regulations! 🎯

The Crypto Circus Under the Big Top of Regulation

India has become a tightly regulated circus for crypto lovers, imposing a flat 30% tax on capital gains from digital assets. Many in the sector argue this policy is stifling what could be the world’s largest market. Talk about throwing a wet blanket on a bonfire! 🔥

Since categorizing Virtual Digital Asset service providers under the Prevention of Money Laundering Act, the FIU has been on a path to mandatory registration and compliance for all exchanges. It’s a regulatory rollercoaster ride! 🎢

Recent stats reveal that 49 entities registered as reporting institutions during the 2024-25 period, including 45 domestic platforms and four major offshore exchanges. Binance, Coinbase, and KuCoin have re-entered the market like returning heroes after their compliance quests. 🦸‍♂️

Yet, some key players, like the Reserve Bank of India, remain skeptical, classifying cryptocurrencies as high-risk assets. Will the love story between India and crypto ever blossom? Only time will tell, my friends. ⏳

Read More

2026-01-12 10:56